Monday, August 6, 2012

Affordable Care Act

The following was written by former JEA President Scott Berryessa based on his experiences.  I share this so you can see some of the benefits of the new Affordable Care Act.


All members of UEA and its affiliates are concerned with the rise of health insurance premiums and the ramifications of the Affordable HealthCare Act (ObamaCare.)  No doubt you have all heard many criticisms of this legislation as it has often been demonized and politicized, but I think our members deserve some facts that are separate from the partisan dialogue.

After serving on the Insurance Committee for ten years for Jordan School District and most recently for the last two years as the public education representative on the Board of Directors for P.E.H.P. (Public Employees Health Plans) and The Utah Retirement System, I have been a keen observer of the trends in health insurance.   I’d like to share some trends that you are not likely to hear in the media that you ought to consider.

Hopefully you are each aware of the positive aspects of the ACA as far as added coverage for children to age 26, covered wellness care, no more lifetime caps on coverage and the fact that soon no one can be denied coverage for  pre-existing conditions.   There are many more yet to come as they are implemented.    These are all welcome benefits that may help every one of us --eventually.  However, I’d like to share some data that you may not be aware of, but should consider and embrace.

Much of the criticism of “ObamaCare” that is being spread is that it does not do anything to contain or restrain the rising costs to cover these new benefits, let alone previous ones.  Opponents of the act claim the ACA is driving up the costs of health care. That is not true and here are some facts you need to know as you weigh the healthcare act:

In 2010-11 the initial parts of the act began to be phased in.   Keep in mind it will take a few more years before it is entirely implemented and that one of the biggest cost savings aspects, the insurance exchanges, will not be put into effect until 2014.

I hope you all will remember that in the 10 years prior to 2010, national healthcare expenses were rising year after year.  In Utah many of our school districts experienced double digit premium increases more often than not and this necessitated that employees had to pay more each year for their share of their health insurance and/or had to reduce important parts of your plans so they offered less.  For most of you, co-pays and deductibles were also increased to spread more costs to you.   As a member of the UEA Board and of my districts negotiations team during this time I know that my district and probably all of yours were forced to take less on the salary schedule to supplant additional insurance increases.  This erosion of potential earnings will cost us dearly in our retirement earnings.

Well, the good news is that nationally, insurance costs have dropped to less than 4 percent per year in the last two years and this is also reflected in Utah!!  This is attributed to the ACA and nationally has saved over $220 BILLION since 2010. Furthermore, healthcare costs are projected to stay level in the near future at least according to experts.

Between 2000 and 2009 the average family premium more than doubled at an annual increase of 8.1%, but in the two years since, premiums still rose-- but at a rate of 25% lower -- creating a savings of more than $1200 per family.  Some of the increase the last two years is credited to the fact that many insurance companies raised their premiums for profit taking before the part of the act took effect that demands that  now they MUST  justify any new  rate increase and prove it is necessary directly to improve patient care.  That is another cost saving part of the ACA you don’t hear about.  In fact, starting this month 13,000,000 Americans will be getting rebate checks back from their insurance companies if their company/provider did not meet the standard of proving, through audits, that they spent 80-85% of EVERY premium dollar for patient care directly.  The rebates will average about $138 each for a total of more than $1.1B that will be refunded this first year alone.  This part of the law insures cost efficiency from providers to meet that standard.  The largest companies and providers can only use 15% of every premium dollar for marketing, equipment, buildings, CEO compensation and shareholder dividends –(profit taking) etc.  Prior to the ACA the average spent on these things for most Insurance companies and providers was nearly 30% or more according to many studies.

The law will provide even more relief in years to come, including a tax cut averaging $4,000 for 18 million middle class Americans unless the Republican congress repeals the ACA.

Another falsehood being spread is that the law is putting a greater burden on small businesses. The facts show the opposite to be true.  Small business owners were struggling in the health insurance market long before the law passed, spending an average of 18% more than their larger competitors annually for employee coverage and often seeing their bills skyrocket if even a single employee got sick. The result of this was that many small companies dropped offering health insurance to their workers. This was not because of the ACA but the conditions that existed prior to 2020.

Since the law passed, the share of small businesses now offering coverage has held steady and will start to rise with the implementation of the insurance exchanges and, in part, due to new tax credits in the law and according to the Kaiser Family Foundation, this will save hundreds of thousands of small companies thousands of dollars each on their insurance costs.  When small businesses and the self-employed have the choice of shopping for coverage in the new health marketplaces, created by the states that establish market options through the exchanges, this will be a boon to expand worker coverage according to the Rand Corp.

A third common attack recycled about the ACA is that it cuts Medicare benefits.  In truth, Medicare is stronger than ever now.

Thanks to the ACA (ObamaCare), seniors have new benefits such as free preventive care as well as discounts on brand name medications in the “doughnut hole” coverage gap and this has already saved more than 5 MILLION seniors almost $600 each!!  Plus, Medicare Advantage premiums have fallen two years running.  New crackdowns on fraud abuse contained in the ACA have returned a record $5.4 BILLION to Medicare since 2010.  In fact aspects of the healthcare law have strengthened Medicare’s long term outlook, adding eight additional years to the projected solvency of the Medicare Trust Fund. These are all important facts especially to every educator that is concerned about the future costs of insurance eating away at their retirement and disposable incomes.

No matter what your political leanings are, insurance costs should matter to you and knowing the facts is critical.  People are entitled to their own opinions but not to their own facts. These facts and others that I didn’t mention make one thing clear: Since the Affordable Care Act was passed, national health spending and insurance premium rates are rising at a slower rate, health insurance coverage is becoming more available and affordable to more Americans, small business coverage is holding steady and soon will increase and Medicare is on a stronger financial footing.

The legislation is not perfect but there has been no other credible plan or cadre of ideas put forward so I’d hope we as citizens can unite together to push our Congress to work to improve upon what we have.

Scott Berryessa

No comments:

Post a Comment